In the sometimes confusing world of technical analysis, it is not always easy to identify both major support and major resistance all of the time. The index has certainly repelled significantly from last week’s low (4101.75) and is some 270 points off that depressed level. Therefore, leaning on that level for a stop loss or potential exit would entail taking in an inordinate amount of risk.
In fact, the index did not even come close to Friday’s low, even when it was down 130 handles in the premarket session.
At this time, it is much easier to identify major resistance, and if breached could lead to much higher prices. Keep in mind that the S&P 500 index futures actually closed in the green last week at 4380. The key level on the upside for another leg higher is based on the daily highs from three of the last five sessions.
Just above Friday’s close, there is the high from last Tuesday (4391.25), Friday 4384.50, and today’s high (4385.50). Not a perfect triple top, but close enough for this technician.
Although the index briefly went green earlier in the session, it closed slightly in the red. After being down 130 handles in the premarket, the loss was trimmed to 10 handles at 4370.
Being included in the alternate energy play, Tesla Inc. (NASDAQ: TSLA) was by far the biggest gainer of the top components. The issue added $60.56 or 7.5% to close at $870.43.
That was much better than the cash index’s fractional loss of 0.24%.
Fears of the Fed backing off on fighting inflation caused JP Morgan & Chase Co. (NYSE: JPM) to be the biggest loser of the top components. The issue swooned $6.17 or 4.2% to close at $141.80.
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